44. The Court of Appeal held that the discretion was unfettered. Lord Denning MR said that it was a revolutionary step which "alters our whole approach to time bars". So it did. Firman's case was on this point approved by the House of Lords in Thompson v Brown [1981] 1 WLR 744 and since then the practice of the courts has been regularly to exercise the discretion in favour of the plaintiff in all cases in which the defendant cannot show that he has been prejudiced by the delay. No matter how negligent the claimant's solicitors may have been in the simple skills of keeping a diary, the plea of limitation which the statute confers upon the defendant is, in the absence of forensic prejudice, described as a windfall of which he can properly be deprived.

45. Mr O'Brien QC, on behalf of the MIB, says that this is very unreasonable. The effect is to transfer to motorists' insurers (and through them, to the motoring public) a liability which, if the Limitation Act had been more strictly applied, would have been borne by solicitors' insurers. It is also inimical to good order and discipline in the solicitor's profession, because it enables solicitors to ignore the Limitation Act in the knowledge that their clients will not be put in the position of having to sue them for negligence.

46. These arguments raise questions of public policy of which the courts have always been conscious, although it cannot be said that their views on the matter have been consistent. For example, in Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2 QB 229, 256, Diplock LJ said of a plaintiff whose action had been struck out for want of prosecution because of delay by his solicitors:

"As regards the position of the plaintiff, it is of course unfortunate that he, though personally blameless, should suffer for the default of his agent. But if he does, he is not without a remedy, for unless he himself has caused or consented to the delay which has resulted in his action being dismissed for want of prosecution, he will have a right of action against his solicitor for negligence. Liability for professional negligence is a risk against which most solicitors insure."

47. Likewise, in Deerness v John R Keeble & Son (Brantham) Ltd [1983] 2 Lloyd's Rep 260, 264 Lord Diplock said that a plaintiff whose claim was barred by the rule in Walkley's case could not complain of unfair treatment:

"The plaintiff herself will not suffer The solicitors' insurers will have to pay out for a risk that they insured and for which they charged a premium; so they have suffered no injustice".

48. On the other hand, in Thompson v Brown [1981] 1 WLR 744, 750 Lord Diplock did not think that an action for negligence against the solicitor was sufficient to prevent the limitation period from operating to his prejudice:

"even where if the action were not allowed to proceed the plaintiff would have a castiron case against his solicitor in which the measure of damages will be no less than those that he would be able to recover against the defendant if the action were allowed to proceed, some prejudice, although it may be only minor, will have been suffered by him. He will be obliged to find and to instruct new and strange solicitors; there is bound to be delay; he will incur a personal liability for costs of the action up to the date of the court's refusal to give a direction under section 2D; he may prefer to sue a stranger who is a tortfeasor with the possible consequences that may have on the tortfeasor's insurance premiums rather than to sue his former solicitors with corresponding consequences on their premiums."

49. There are, one can see, arguments on both sides. But they raise questions of general public policy which in my opinion are more appropriate for parliamentary than for judicial decision. The motor insurance industry and the motoring public are not without a political voice and if it is thought appropriate to shift the burden from one group of insurers to another, it is up to them to persuade Parliament to do so. For the moment, we have many years of settled jurisprudence on how the discretion should be exercised which I think it would be wrong to disturb. The manner in which Judge Cooke said that he would have exercised his discretion seems to me well within the principles and guidelines laid down by the decisions of the Court of Appeal and, now that your Lordships have decided that he had a discretion, it should in my opinion be given effect. I would therefore allow the appeal and dismiss the cross-appeal.

LORD RODGER OF EARLSFERRY

My Lords,

50. I have had the advantage of considering the speech of my noble and learned friend, Lord Bingham of Cornhill, in draft. I agree with it and, for the reasons he gives, I too would allow the appeal and dismiss the cross-appeal.

LORD CARSWELL

My Lords,

51. I have had the advantage of reading in draft the opinion prepared by my noble and learned friend Lord Bingham of Cornhill. I am in full agreement with his reasons and conclusions in respect of the appeal, which I too would allow. It is for those reasons time for the House to depart from its earlier decision in Walkley v Precision Forgings Ltd [1979] 1 WLR 606, a decision which many people, myself included, have long thought to be based on flawed logic and capable of causing signal unfairness. Once it is out of the way, as the result of the present appeal, then the issue between the claimant and the Motor Insurers' Bureau falls to be decided by reference to the discretion conferred on the trial judge by section 33 of the Limitation Act 1980. The reasons on which Lord Diplock and the other members of the House relied in Walkley as grounds for holding that a claimant in a case such as the present appeal could not bring himself within section 33 (or its predecessor) may still be relevant as factors in the exercise of the judge's discretion, but they should rank as no more than factors.

52. In his judgment given on 7 May 2003 on the preliminary issues Judge Cooke stated that were he to exercise the discretion under section 33 he would have exercised it in favour of disallowing the limitation period in the second claim, that is to say, he would have allowed the action commenced out of time to proceed. He conducted a careful exercise of considering the competing factors and weighing them against each other. Of the statutory factors set out in section 33 he regarded as directly applicable only (a) length and reasons for delay (b) staleness of evidence. He went on to say :

"In this case (b) really has no effect and as to (a) the length of delay since the expiry of the period is short and the reasons for the delay are the failure to meet the technical but vital requirements to make the first claim effective.

If one viewed the case in the round without the factor of a claim against the solicitors' insurers I would have thought that the balance would come firmly down in favour of the Claimant. The delay is very small, the effect on the trial is minimal, the MIB has lost a fortuitous limitation defence the Claimant has lost his chance of having his judgement met by the MIB. All, I would have thought point one way."

53. The judge went on to consider whether the claim against the solicitors' indemnity insurers tilted the balance. He referred to a number of previous cases which in his view supported the proposition that it should not. I do not think that there is much to be gained from an extended review of these cases, all of which were opened to us by counsel, for to a considerable degree all such cases turn on their particular facts. A few observations may, however, be worth making :

(a) The prejudice to the claimant by the operation of the limitation provision and the prejudice to the defendant if it is disapplied tend, as Parker LJ pointed out in Hartley v Birmingham City District Council [1992] 1 WLR 968, 979, to be equal and opposite. He regarded the effect of the delay on the defendant's ability to defend as being of paramount importance.

(b) In Das v Ganju [1999] Lloyd's Rep Med 198 at 204 and Corbin v Penfold Metallising Co Ltd [2000] Lloyd's Rep Med 247 at 251 the Court of Appeal expressed the view that there was no rule that the claimant must suffer for his solicitor's default. If this is interpreted, as it was in Corbin, as meaning that the court is not entitled to take into account against a party the failings of his solicitors who let the action go out of time, that could not in my view be sustained and the criticism voiced in the notes to the reports of Das and Corbin would be justified. The claimant must bear responsibility, as against the defendant, for delays which have occurred, whether caused by his own default or that of his solicitors, and in numerous cases that has been accepted : see, eg, Firman v Ellis [1978] QB 886, Thompson v Brown [1981] 1 WLR 744 and Donovan v Gwentoys Ltd [1990] 1 WLR 472. The reason was articulated by Ward LJ in Hytec Information Systems Ltd v Coventry City Council [1997] 1 WLR 1666, a case of striking out, when he said, at p 1675 :

"Ordinarily this court should not distinguish between the litigant himself and his advisers. There are good reasons why the court should not: first, if anyone is to suffer for the failure of the solicitor it is better that it be the client than another party to the litigation; secondly, the disgruntled client may in appropriate cases have his remedies in damages or in respect of the wasted costs; thirdly, it seems to me that it would become a charter for the incompetent (as Mr McGregor eloquently put it) were this court to allow almost impossible investigations in apportioning blame between solicitor and counsel on the one hand, or between themselves and their client on the other."

(c) That said, whereas the claimant will suffer obvious prejudice if the limitation period is not disapplied, this may be reduced by his having a cause of action in negligence against his solicitors. The extent of that reduction will vary according to the circumstances, but even if he has an apparently cast-iron case against the solicitors the factors referred to by Lord Diplock in Thompson v Brown at p 750 require to be borne in mind.

(d) Judge Cooke was urged to agree with the proposition accepted in Morris v Lokass (2003, unreported), that the loss should fall on the insurers who had accepted a premium for the risk which has caused the claimant the relevant loss (the solicitor's professional liability insurers) and not on the MIB who have collected no such premium. The judge expressed himself as unpersuaded by that argument, and in my view he was correct in this. The MIB entered into their first agreement with the Minister of Transport in 1946 and the subsequent agreements for their own good reasons, and for the purposes of considering applications of the present nature they should not be regarded differently from motor insurers or professional liability insurers.

54. The judge carried out the exercise of balancing the prejudice on each side and concluded :

"In my judgement that particular balance is a fairly fine one but I think it resolves into a finding (as I would make) that the MIB who have been on notice of the claim and have no problems over evidence that they did not have before are simply losing the windfall of a limitation defence while the Claimant has to bring yet further litigation against a new Defendant. So balanced I think it comes down in favour of the Claimant."

55. At the conclusion of the hearing I felt some doubt whether Judge Cooke's conclusion should be sustained. I was unsure that he had given sufficient weight to the strength of the appellant's case against his solicitors (which has been borne out by the fact that their insurers have already settled with him, but that fact post-dated the judge's consideration of the application and one should not take it into account now). I also felt that it might not be inappropriate to mark the fact that the solicitor's mistake was very elementary. Any solicitor who undertakes a road accident case for a claimant has to be aware that he must serve notice on the insurers of the bringing of the proceedings to trigger their obligation to meet a judgment; and if there is no insurer on risk, involve the MIB and serve the necessary notice under clause 5(1) of the MIB Agreement of 21 December 1988. These are such basic requirements that failure to fulfil them can only be regarded as a serious piece of professional negligence.

56. On reflection, however, I have come to the view that Judge Cooke's decision should not be upset. It was carefully considered, by reference to the correct factors, and it is not for this House to reverse it lightly, whatever conclusion the several members of the Committee might have reached if hearing the application de novo. Nor do I think, on similar reflection, that the seriousness of the solicitors' error should weigh in the balancing exercise under section 33, which should assess the prejudice to the respective parties. I also consider that decisions by judges who deal regularly with applications of this nature should carry substantial weight, and that the Court of Appeal is well equipped to oversee them and lay down any necessary guidelines.

57. I accordingly agree the appeal should be allowed and the cross-appeal dismissed.

LORD BROWN OF EATON-UNDER-HEYWOOD

My Lords,

58. For the reasons given by my noble and learned friend Lord Bingham of Cornhill, with which I am in complete agreement, I too would allow this appeal. I agree also with the opinions of my noble and learned friends, Lord Hoffmann and Lord Carswell. This short judgment I add simply because in the Court of Appeal I myself had so frequently to grapple with the intractable problems which inevitably followed upon the House's ruling in Walkley v Precision Forgings Ltd [1979] 1 WLR 606.

59. Walkley decided that upon the true construction of section 33 of the Limitation Act 1980 (like Lord Bingham I refer for convenience only to the current sections) section 11 (which imposes a three-year time limit on personal injury actions) can never (the subsequent decision of the House in Deerness v John R Keeble & Son (Brantham) Ltd [1983] 2 Lloyd's Rep 260, recognised that the Walkley ruling logically admits of no exceptions) "prejudice the plaintiff" in any action for damages for injuries in respect of which he had previously issued proceedings within the primary limitation period. In these circumstances, the House ruled, the plaintiff is not prejudiced by the operation of section 11 but only by his failure to bring his earlier timeous claim to a judgment on the meritswhether through a failure to serve it or through delays in its prosecution leading to strike out or through discontinuance for whatever reason.

60. What is difficult to understand, however, is why on this approach it would not be equally correct to say that the plaintiff was not prejudiced by section 11 even in a case where he had issued no proceedings in the primary limitation period. Why should it not be said then that his only prejudice is through that failure? The effect of that, of course, would be to negate section 33 entirely and unsurprisingly the House in Thompson v Brown [1981] 1 WLR 744 rejected such a conclusion. The way it was put by Lord Diplock at pp 752 H-753A was this:

"It may seem anomalous that a defendant should be better off where, unknown to him, a writ has been issued but not served than he would be if the writ had not been issued at all; but this is a consequence of the greater anomaly too well-established for this House to abolish that, for the purposes of a limitation period, an action is brought when a writ or other originating process is issued by the central office of the High Court and not when it is brought to the knowledge of the defendant by service upon him."

61. What Lord Diplock appears there to be saying is that whether or not the section 33 discretion exists should logically depend upon whether the defendant actually knows of the issue of timeous proceedings against him: if he knows within the primary limitation period that a claim has been brought, then (but not otherwise) he should justifiably be safeguarded against the possibility of a second action being brought against him out of time.

62. My recollection is that some such thought process underlay my own throwaway remark in Young, decd v Western Power Distribution (South West) plc [2003] 1 WLR 2868, 2883, at para 56, that "the [Walkley] principle may after all not be quite so anomalous and unfair as hitherto it has been characterised." As it now seems to me, however, there could be no justification whatever for the existence of the section 33 discretion to depend upon whether or not the defendant knew of an initial action brought within time. Why should he feel any more secure against a possible claim out of time (necessarily by second action) because he knew of a first action brought in time than if he had heard nothing whatever of a proposed claim against him within the primary limitation period?

63. The curious but plain fact is that in Walkley Homer nodded: an impossible and illogical construction was put upon the section. The House's mistaken approach appears clearly from the passage in Lord Diplock's speech cited by Lord Bingham at paragraph 16 above. In stating there that a plaintiff who has already brought a first action in time "has not been prevented from starting his action by section [11] . . . he was able to start his action" (emphasis added), Lord Diplock appears to have confused or conflated the two separate sets of proceedings: it is not the first action in which the plaintiff is prejudiced by the time bar but the second; and it is the second action for which the plaintiff seeks the favourable exercise of the court's section 33 discretion "to allow an action to proceed having regard to the degree to which . . . the provisions of section 11 . . . prejudice [him]."

64. It is for the very reason that the Walkley ruling is so lacking in logic and intrinsically productive of anomalies that the courts have found such difficulty in its subsequent application. There is simply no coherent principle by which to judge its true scope and how in any particular case which raises the smallest factual distinction it should apply. Small wonder that it has given rise to so much unsatisfactory jurisprudence.

65. In R v National Insurance Commissioner, Ex p Hudson [1972] AC 944 the House divided 4:3 upon whether, pursuant to its 1966 Practice Statement, to depart from a previous decision bearing in mind that there, as most of the Committee accepted, there were two tenable views as to the proper construction of the statute in question. Here by contrast section 33 admits of only one tenable construction not, unfortunately, that afforded to it by the House in Walkley. There can be no doubt that both justice and certainty would be advanced by the House now departing from the Walkley ruling. That it has stood for so long is a pity. It is certainly no reason to perpetuate it any longer.